The Obama Administration's Priorities in South and Central Asia

Remarks

Robert O. Blake, Jr.

Assistant Secretary, Bureau of South and Central
Asian AffairsHouston, TX

January 19, 2011

Remarks as prepared

It’s always a treat to get out of Washington, but
it’s truly an honor to speak at the James A. Baker III Institute for
Public Policy at Rice University, risen to become one of the leading think
tanks.The demands of my job
usually require me to travel overseas frequently, and I wish I could have
more events in the U.S. like this, although some in Washington might
question whether coming to Texas is still considered domestic outreach.

In any case, I welcome opportunities like this to
discuss our foreign policy with informed Americans.I had a great interaction with students this afternoon, and I look
forward to a similarly lively exchange after my remarks.

I thought I would offer a brief review of the South
and Central Asia region, with a particular
emphasis on issues of importance to Houston.I deal primarily with the region from Sri Lanka in the south
to Kazakhstan in the north, from Maldives to Bhutan, with a Special
Representative taking the primary job of coordinating policy in
Afghanistan and Pakistan.

For many Americans this part of the world is
primarily defined by the challenges we face in Afghanistan and Pakistan,
but it is also marked by great promise and opportunity.Central Asia lies at a critical strategic crossroads, bordering
Afghanistan, China, Russia and Iran, which is why the United States wants
to continue to expand our engagement and our cooperation with this
critical region.And South
Asia, with India as its thriving anchor, is a region of growing strategic
and commercial importance to the United States in the critical Indian
Ocean area.

In total, the region is home to over two billion
people -- roughly one fourth of the world’s population.It is incredibly diverse, ranging from the crowded metropolises of
India and Bangladesh to the vast stretches of unpopulated steppe in
Kazakhstan.

The Silk Road once linked the South and Central Asian
regions through an extensive trade network.Cultural and political linkages came later.Timur, whose legacy still holds strong in Uzbekistan,
established a strong cultural link between these regions in the late 14th
century when his armies conquered Multan and Delhi. He planted the seeds
of the powerful Mughal dynasty that would later go on to produce cultural
marvels like the Taj Mahal in India.

Today, however, the region is one of the least
integrated in the world, as I experience every time I travel to the
region, when I often have to transit through Istanbul, Moscow or Dubai to
get from one Central Asian capital to another.

With rapidly growing economies like India, emerging
markets in Bangladesh and Kazakhstan, and resource-rich countries like
Uzbekistan and Turkmenistan, greater linkages in this region would bring
tremendous benefits to its citizens, as well as the world.There are some nascent efforts in that direction such as TAPI that
I will describe later.

Administration Priorities

Given this dynamic regional context, we have three
primary objectives in the South and Central Asia region:

·Support international efforts in Afghanistan;

·Build a strategic partnership with India; and

·Develop more durable and stable relations with the Central Asian
countries.

After describing these priorities at greater length,
I will then focus on energy resources in Central Asia, which I imagine is
of particular interest in Houston.I’d
also like to give a shout-out to a few countries in South Asia that
don’t fit neatly in these priorities, but hold importance for the U.S.
all the same.

Afghanistan and Pakistan

My bureau’s single most important priority is
supporting stabilization efforts in Afghanistan.The President, Secretary Clinton, Secretary Gates and other members
of the Cabinet have spent countless hours reviewing and honing our efforts
in the region.I am pleased
to say that Central Asia and India have played a critical role in
supporting coalition efforts in the region.

The Northern Distribution Network – the NDN –
runs through most of the Central Asian countries, supplies a growing
percentage of provisions for our military effort and offers an alternative
to the more widely used southern supply route through Pakistan.The NDN increasingly offers the people of the Central Asian
countries the opportunity to sell goods and services to NATO troops in
Afghanistan, and we hope it can help catalyze greater trade and economic
cooperation between Afghanistan and Central Asia.

Even beyond the NDN, the Central Asian nations have
underpinned our efforts to fight the Taliban and rebuild Afghanistan.Kyrgyzstan hosts the Manas transit center, which facilitates troop
transport and supports refueling missions for coalition forces in
Afghanistan.

Electricity from Uzbekistan and Turkmenistan power
the lights of Kabul, while the completion of a railhead in Mazar-e-Sharif
this year will link the Uzbek and Afghan railways.Cultivating broad and long-lasting relationships with the Central
Asian countries is the only way to ensure a common understanding and gain
their long-term support for our efforts in Afghanistan.

We hope that the Afghanistan-Pakistan Transit Trade
Agreement, which will enter into force on February 11, will also lead to
increased trade between Afghanistan and its northern neighbors Tajikistan,
Uzbekistan and Turkmenistan.Further
afield, we also see the agreement as opening an opportunity for India and
Pakistan to ramp up commercial engagement.

South Asian countries also have supported
international efforts to rebuild Afghanistan.Bangladesh’s largest NGO, BRAC, runs activities in all 34 of
Afghanistan’s provinces.India
has been a major contributor to reconstruction, with more than $1.3
billion in assistance so far, including the construction of highways,
transmission lines, and the parliament building.

As a sign of our close partnership in the region, the
President announced during his landmark visit to India in November that we
would work with India on women’s empowerment and capacity building in
Afghanistan.

Advancing the U.S.-India Strategic Partnership

These projects with India in Afghanistan mark a small
but important part of a significant new global development- the emergence of a global strategic partnership between India and
the United States.As President Obama said in his November 8 speech to the
Indian Parliament, “For the first time ever, our governments are working
together across the whole range of common challenges that we face.Now, let me say it as clearly as I can:The United States not only welcomes India as a rising global power,
we fervently support it, and we have worked to help make it a reality.”

India’s democracy, diversity and knowledge-based
society make it special, a model of a tolerant pluralistic society in the
region, and one that now actively seeks to work with the U.S. and others
to help solve problems on a global level.

Growing ties between our societies, our economies and
our governments have helped sustain and accelerate India's rise. The
nearly three million Indian-Americans in this country, including many in
the Houston area, provide a powerful connection between us, as do the more
than 100,000 Indian students studying in U.S. universities.

Bilateral trade has more than tripled in the last
decade, creating jobs and opportunities for both of us. Cooperation in
counter-terrorism and defense modernization is at unprecedented levels.

The strength of India’s economy makes it the
powerhouse of South and Central Asia’s growth.India’s economy grew about 7.4 percent in 2010, one of the
fastest in the world, and by 2025 India is expected to become the 3rd
largest economy in the world, behind the United States and China.Its middle class now numbers 300 million and is expected to double
over the next 20 years.

India’s growing economic power has also made it
among the fastest growing investors in the United States.Over the last decade, investment from India to the United
States grew at an annualized rate of 53% reaching an estimated $4.4
billion in 2009.

Engagement across the U.S.and Indian governments has never been as robust and comprehensive
as it is today.The
President’s dramatic visit to India highlighted the vast ties between
our two countries, and our cooperation on critical issues ranging from
climate change, to counter-terrorism, nonproliferation and energy
diversity.President Obama
acknowledged India’s growing role in the world by endorsing India for a
permanent seat on the UN Security Council.

Our people-to-people linkages likewise have grown
tremendously.During his stop
in Mumbai, President Obama announced business and defense deals that
exceeded $14.9 billion, with $9.5 billion in U.S. export content,
supporting the creation of over 50,000 jobs.

Texas has played a crucial role in furthering our
partnership.In fact, while I
served as the DCM in our Embassy in New Delhi in 2005,
Houston-headquartered Continental Airlines was the first American carrier
to start direct flights between Delhi and the United States.The large Indian diaspora here illustrates the personal ties that
exist without that do so much to catalyze better relations.

We will build on the President’s visit in the
coming year through an intensive program of collaborative activities,
high-profile visits and even greater engagement.Of particular note, we welcome the opportunity to work with India
closely during its two-year tenure on the UN Security Council, which
started January 1.

On the business side, Commerce Secretary Locke will
travel to India in February to attend Aero India, the biannual Indian
aerial fair that has grown in importance as India itself has grown.India will soon announce the winners of a tender worth up to
$12 billion to supply 126 medium multi-range combat aircraft – a
competition in which both Boeing and Lockheed Martin have entered their
jets.

Secretary Clinton and other Cabinet officials will
also travel to India this spring for the U.S.-India Strategic Dialogue,
which oversees the entire spectrum of our cooperation.

I could go on into our joint activities to promote
healthy families, reinforce food security in Africa, engage in regional
consultations, develop innovative clean energy, bring monsoon forecasting
data to farmers…and the list goes on.What we ultimately aim to do is develop the habits of cooperation
that establish a partnership that will shape the 21st century in a way
that bring peace and prosperity to the world.

Energy-Rich Central Asia

We also aim to expand our cooperation and engagement
with Central Asia.President
Obama’s and Secretary Clinton’s successful reset of our relationship
with Russia has given us the political space to engage more deeply in the
region without sparking fears of a new Great Game.In fact, U.S.-Russian cooperation on Central Asia has never been
closer.In April 2010, for
example, we worked closely to respond to the political and humanitarian
crisis in Kyrgyzstan, which prompted an unprecedented Joint Statement by
President Obama and President Medvedev.We are now looking at new cooperation in areas such as
counter-narcotics to complement our political dialogue.

Throughout history, Central Asia has acted as the
strategic crossroads linking China to Russia, and Europe to South Asia.The countries themselves have embraced their growing role in
determining world events.

Kazakhstan just completed its tenure as Chairman of
the Organization for Security and Cooperation in Europe, during which it
hosted a Summit – the first in 10 years – that reaffirmed the Helsinki
Principles, which outline basic human rights expected in post-Soviet
Eurasia.In 2011, Kazakhstan
has assumed the Chairmanship of the Organization for Islamic Countries,
giving it an influential role in this key gathering of nations.

Kyrgyzstan emerged as Central Asia’s first
parliamentary democracy last year.And
President Berdimukhamedov in Turkmenistan almost single-handedly
resurrected the Turkmenistan-Afghanistan-Pakistan-India pipeline, which if
successful will finally link the resources in Central Asia with the
markets of the south.More
on the TAPI pipeline later.

To use the window of opportunity to establish a
deeper and broader dialogue with each of the Central Asian countries, the
U.S. established Annual Bilateral Consultations last year.In each of those held last year, we engaged in frank discussions
about trade, human rights, democratic reform, defense cooperation,
regional issues such as Afghanistan, and any other issue that either side
thought relevant.I look
forward to starting the second round of ABCs with Uzbekistan next month in
Tashkent.

Given your university’s location in Houston, you
undoubtedly have interest in the energy opportunities in the region.Let me go into more detail about those opportunities, as well as
the TAPI pipeline.

Kazakhstan

Kazakhstan is arguably the economic powerhouse of
Central Asia.President
Nazarbayev’s decision to invite major oil companies to develop the
country’s vast hydrocarbon resources in the 1990s was a game-changer for
Kazakhstan’s future.Already
a significant oil producer, Kazakhstan will account for one of the largest
increases in non-OPEC supply to the global market in the next 10-15 years
as its oil production doubles to reach 3 million barrels a day by 2020.

Ensuring this oil reaches the world market is
crucial.Such a rapid
increase in production will force the Kazakh Government, major oil
companies, and investors to work fairly quickly to establish new export
routes for the additional volumes of oil.This will require a range of political and economic negotiations,
as well as significant infrastructure investment.

However, the Kazakh Government has indicated that it
may seek to retroactively change the terms of contracts already signed.Such actions would significantly damage Kazakhstan’s credibility
and reputation with potential foreign investors.The U.S. will continue to work with the Government of Kazakhstan to
ensure the best possible trade and investment climate for our companies.

Uzbekistan

Though often overlooked as an energy source,
Uzbekistan has substantial hydrocarbon reserves of its own and produces
about as much natural gas as Turkmenistan.Located at the heart of Central Asia, much of the region’s
infrastructure – roads, railroads, transmission lines, and pipelines --
goes through Uzbekistan, offering it a unique opportunity to expand its
exports with little investment in new infrastructure.

Uzbekistan currently exports gas to Russia,
Tajikistan, Kazakhstan and Kyrgyzstan.The natural gas pipeline between Turkmenistan and China crosses its
territory, making exports to China possible, at least in theory.

Turkmenistan

After over a decade of near-isolation under former
President Niyazov, Turkmenistan is slowly opening to the world.The country’s substantial natural resources may make
Turkmenistan one of the top five countries worldwide in terms of gas
reserves.These reserves have
attracted the attention of many countries interested in securing Turkmen
gas for various pipeline projects.

The recently-opened Turkmenistan-China gas pipeline
was an important step in enhancing Turkmenistan’s economic security by
diversifying its export routes.Turkmenistan’s initiative to send natural gas to India through
Afghanistan and Pakistan, known as the TAPI pipeline, would further reduce
its reliance on a single energy market.

The U.S. has welcomed renewed interest in TAPI,
although the challenges to completing such a project are numerous and
real.The project would
require a multi-billion dollar investment to build a pipeline that would
cross volatile areas of Afghanistan and Pakistan as well as the tense
border between Pakistan and India.

Despite these difficulties, there has been recent
progress on TAPI and important steps continue on the part of the
participating governments.The
Presidents of Turkmenistan, Pakistan, and Afghanistan and the Minister of
Petroleum and Natural Gas of India signed an Intergovernmental Agreement
on the TAPI pipeline on December 11, 2010.

Now these governments will begin to discuss issues
such as pricing and transit terms.This
suggests renewed interest and political will to move forward with the TAPI
pipeline project, which has been under discussion since the 1990s.

This project, if realized, would provide revenue and
jobs for Afghanistan at a critical time in its economic development.TAPI would also provide clean fuel to the growing economies of
Pakistan and India.TAPI’s
route may serve as a peace corridor, linking neighbors together in
economic growth and prosperity.The
road ahead is long for this project, but the benefits could be tremendous
and are certainly worthy of the diligence and interest demonstrated by
these four countries so far.After
all, pipelines are long-term projects with long-term horizons and,
consequently, long-term benefits.

CASA-1000

Complementing the TAPI project, the U.S. has worked
with the World Bank on an initiative to take advantage of Central Asia’s
lower production cost for hydro-electricity and South Asia’s insatiable
hunger for energy.The
Central Asia – South Asia 1000 Megawatt project, known as CASA-1000,
envisions building a transmission line to export summer surplus
hydroelectricity from Kyrgyzstan and Tajikistan to Afghanistan and
Pakistan.

Kyrgyzstan and Tajikistan would benefit from the sale
of surplus electricity to Afghanistan and Pakistan.Afghanistan would have the secondary benefit of
charging transit fees for energy exported to Pakistan.The four countries have agreed to explore the technical and
commercial potential for this project.

The benefits of the CASA project would be
transformational for all participating countries.We are encouraged the project is moving forward and want it to do
so in a sound and transparent manner.

The CASA 1000 project has the potential to build on
what is a small, but growing electricity trade between Central Asia and
South Asia.Turkmenistan and
Uzbekistan both export electricity to Afghanistan.These imports have resulted in a noticeable increase in northern
Afghanistan’s electricity supply- particularly in Kabul.

The Other South Asian Countries

A review of my bureau would not be complete without
mentioning the other South Asian countries that neighbor India: Sri Lanka,
Nepal, Bangladesh, Bhutan, and Maldives.The growth of India has overshadowed the progress made in all of
these countries.

Bangladesh has experienced an average of 6% growth in
GDP over the last 18 years, which has helped lift millions of Bangladeshis
out of poverty.Houston, with
its large Bangladeshi diaspora community, has undoubtedly contributed to
the $11 billion in global remittances Bangladesh receives each year.Bangladesh, with its inclusive growth model and newly stable

government, represents another potential powerhouse
in the neighborhood.The
investigation into the Nobel prize-winning Grameen Bank, however, has
raised concerns.Secretary
Clinton has urged the government to maintain its democratic values and
ensure its investigation is impartial and balanced.

Nepal and Sri Lanka have both ended terrible internal
conflicts in the last few years, but each must now secure the peace.In Kathmandu last week, the UN Mission for Nepal withdrew, putting
responsibility for completing the peace process squarely in the hands of
Nepal’s fractious parties.I spoke with Prime Minister Nepal and Maoist Chairman Dahal
last week to tell them that the United States Government will continue to
support the peace process.

I urged all the parties to continue to respect their
own commitments under the Comprehensive Peace Agreement and said it is
incumbent upon Nepal’s leaders to bring the peace process to a much
needed conclusion.The U.S.
was pleased that the parties reached agreement on arrangements to continue
the monitoring of arms and the armies.We hope that same spirit will help the parties reach agreement on
the integration and rehabilitation of Maoist army personnel into the
Nepalese army and police, and on a new constitution.

While Sri Lanka’s economy has thrived since the end
of its brutal civil war, during the end of which I served as ambassador,
its reconciliation has proceeded more slowly.I hope that the government will act on the recommendations of the
Lessons Learnt and Reconciliation Commission it set up, as part of wider
efforts that will be needed to help establish a lasting peace.

South Asia’s smallest countries, Bhutan and
Maldives, both experienced peaceful transitions to democracy in 2008.The Bhutanese model of Gross National Happiness has shaped new
thinking about economic growth in developing countries, and Bhutan is on
track to achieve all of its Millennium Development Goals.

And the moderate Muslim nation of the Maldives, now
led by a former Amnesty International Prisoner of Conscience, has punched
above its weight in the global debate on climate change, and thought of
innovative ways to illustrate the plight of its sinking atolls.The Cabinet meeting it held underwater certainly captured the
attention of the world.

Conclusion

As you can see, I oversee a region that I cannot do
justice to in 30 minutes.And
while the region’s diversity opens many opportunities, it also presents
a challenge in our efforts to encourage these disparate countries to work
together.We have many
obstacles to overcome still, but I hope that our effort to rebuild
Afghanistan and develop deeper relations throughout the region will
contribute to this vision.

Thank you for the opportunity to speak here today.I’d be happy to take a few questions.